Telkom fined R449 million for 'bullying'
Telkom SA was fined R449 million by the Competition Tribunal on Tuesday for abusing its dominance in the telecommunications market.
Telkom did so between 1999 and 2004, when it was a monopoly provider of telecommunications services.
The tribunal concluded that Telkom had used its upstream (closer to the point of production, than the point of sale) monopoly in the facilities market to advantage its own subsidiary in the competitive, value-added network market.
Telkom's conduct had caused harm to both competitors and consumers, and had impeded competition and innovation.
Half the penalty was to be paid within six months of the Tribunal's decision, and the balance within 18 months.
The Competition Commission received a complaint from the SA Vans Association and 20 other internet service providers in 2004. It then referred the matter to the Competition Tribunal.
Telkom challenged the referral in the high court.
After five years of litigation, the Supreme Court of Appeal found against Telkom in 2009 and referred the matter back to the tribunal.
The tribunal's hearing was concluded in February, with 12 factual and expert witnesses presenting evidence.
The commission alleged Telkom refused to supply essential access facilities to independent, value-added network services (Vans) providers.
Telkom allegedly induced its customers not to deal with Vans, charged their customers excessive prices to access services and favoured its own customers by giving them a discount on distance-related charges.
Through this conduct, Telkom had sought to expand its exclusivity to services over which, in law, it did not enjoy a monopoly.
Telkom had also sought to bypass the regulator entrusted with enforcing the Telecommunications Act, in order to obtain for itself the additional protection of private law remedies.
Telkom did not deny it had acted in this way, but argued it was justified in doing so.
By providing certain value-added services, the Vans providers were engaged in illegal conduct, according to Telkom. It alleged the Vans operators had adopted a business model that effectively trespassed on Telkom's exclusivity rights.
During the hearing, Telkom conceded that its illegality defence would fail if the tribunal were to find that Telkom's interpretation of the regulatory framework was incorrect.
It also conceded that the facilities bought by Vans from Telkom amounted to "essential services", as contemplated in the Competition Act.
The tribunal found Telkom refused to supply essential facilities to independent Vans providers, and had induced its customers not to deal with them.
This conduct resulted in a substantial lessening of competition in the Vans market.